Consumption-based Carbon Research Articles

Does foreign direct investment limit trade-adjusted carbon emissions: fresh evidence from global data.

Environmental degradation has been a major concern for nations globally in recent years as carbon emissions have increased. Environmental degradation, if not controlled, is one of the dangers faced by humankind, and achieving sustainable development goals is not possible without improving environmental quality. Thus, reliable carbon emission measurement plays an important role in developing an effective climate strategy to address the current environmental issues. Following the trade-adjusted carbon emission measure, an effective climate strategy can be formulated especially following the 17 United Nation Sustainable Development Goals that are intended to lead to improvements toward a sustainable future. To fill the gap in the literature, we empirically explore the interrelationship between foreign capital flows and environmental quality measured by trade-adjusted consumption-based carbon dioxide (CCO2) emissions for a panel of 125 countries in 1990-2018 by revisiting the pollution haven hypothesis (PHH). The results obtained using system GMM analysis show that FDI has a significantly positive link with CCO2 in Asia and Africa, but the links between these two variables are insignificant in the Latin American, Caribbean, and European regions. In the cases of the full-sample and developing countries, a significantly positive relationship is found between FDI and CCO2. In the case of income-based samples, results reveal that FDI is the cause of environmental degradation in low-income, lower-middle-income, and upper-middle-income countries. These findings suggest that developing countries should adopt environmentally friendly policies to attract foreign investors by setting strict regulations on environmental pollution control to achieve sustainable development goals (SDGs).

Consumption-based carbon emissions, trade, and globalization: an empirical study of Bolivia.

The consequences of global trade on carbon dioxide emissions have been mainly investigated in several empirical papers; however, the consumption-based carbon emissions adjusted for international trade have been lacking in the literature. This empirical research seeks to address this gap by using consumption-based carbon emissions adjusted for trade in the case of Bolivia. Research over the years shows that Bolivia has had a consistent negative trade deficit which suggests that there might be a rise in consumption-based emission in this area in the present and the future. It also indicates that considerable emissions are attributable to the consumption of commodities and services transferred to Bolivia, which is beyond its control. Many studies, however, have delved into the production-based carbon emission for Bolivia. However, the consumption-based carbon emission adjusted for international trade has been missing in the case of Bolivia. Meanwhile, failure to recognize these emissions related to international trade produces an incomplete picture of the emissions triggers and the effectiveness of action to lessen emissions in this area. Hence, this study attempts to fill the gap. The impact of exports and imports are analyzed separately for 1970 to 2018. The empirical analysis confirms a negative effect of exports and GDP on consumption-based carbon emissions. In comparison, imports and globalization demonstrate a favorable impact on consumption-based carbon emissions and show their statistical significance. This study suggests that the Bolivia government should be cautious on policies targeted at increasing growth as this could be harmful to the sustainability of the environment.

Research on International Carbon Emission Responsibility Based on Tapio Decoupling Model

Based on the WIOD database, the article uses the MRIO model to analyze the production-based and consumption-based carbon emissions and transfer issues in international trade, measures the carbon emissions generated by the EU, China, India, Japan, Russia, and the US in 2014, uses the Tapio decoupling model to clarify the relationship between economic growth and carbon emissions, and determines the responsibility of carbon emissions in each country (region) using 2013 as the base period. The study found that: China and India are based on the production of carbon emissions. It is found that: production-based carbon emissions are higher than consumption-based emissions in China and India, and the opposite is true for EU, US, Japan, and Russia; developing countries are net exporters of trade-embodied carbon and developed countries are net importers of trade-embodied carbon; and a consumption-based accounting approach is used for EU and China, and a production-based accounting approach is used for India, Russia, Japan, and US.

Carbon decoupling and economic growth in Africa: Evidence from production and consumption-based carbon emissions

This study examines the issue of decoupling between economic growth and carbon emissions in 25 African countries over 1990–2017. The study also assesses the role of international trade on carbon emissions The novelty of this study is that it jointly considers both production-based and consumption-based carbon emissions approaches in the regional decoupling analysis and the corresponding separate effects of exports and imports on the decoupling process. The Common Correlated Effects Mean Group (CCE-MG) and Augmented Mean Group (AMG) estimation techniques which allow for cross-sectional dependence, heterogeneity, endogeneity, and serial-correlation issues are mainly applied for empirical analysis. The findings invariably indicate some evidence of relative decoupling for production-based emissions, as the threshold levels of GDP per capita are located well within the range of data in all estimations, but above the sample average of $3770. In contrast, there is no robust evidence of decoupling for consumption-related emissions. Primary energy intensity and population are found as the main drivers of carbon emissions. Further, exports and imports have insignificant effects on production-based emissions, but significant and offsetting effects on consumption-based emissions. The policy implication of the study, thus, is that the global community and policymakers need to pay close attention to consumption-based carbon emissions in international climate negotiations and target-setting discussions, as production-related emissions alone would be insufficient for decarbonizing economic growth.

Key drivers of consumption-based carbon emissions: empirical evidence from SAARC countries.

To devise an appropriate climate policy dealing with environmental degradation, reliable measurement of CO2 emissions is essential. In the recent past, most researchers have utilized production-based emissions in their studies, ignoring the important role of consumption-based emissions in environmental degradation. Therefore, the present research examines the drivers of consumption-based CO2 emissions in SAARC nations over the period 1990 to 2018. By employing traditional and second-generation panel cointegration methodologies, the study, more specifically, explores the link between consumption-based CO2 emissions and its five macroeconomic determinants, namely, GDP growth, energy consumption, FDI, trade openness (measured by composite trade share index), and urbanization. The study also applies the FMOLS and DOLS techniques for calculating the long-run elasticities of regressors with respect to the explained variable. The results establish a cointegration relationship between the variables and validate an "N-shaped EKC" for the SAARC region. It is also found that in the long run, energy consumption and urbanization amplify the consumption-based CO2 emissions while FDI and trade openness improve the environmental quality by plummeting emissions. Most importantly, the study rejects the "pollution-haven hypothesis" for the SAARC region based on the outcomes of FDI and trade openness. Lastly, based on the results, some policies are recommended for the abatement of environmental degradation in SAARC countries. As the SAARC nations rely heavily on fossil-based energy, it is suggestive for these economies to enhance the level of energy efficiency and augment the share of renewable energy sources in the energy mix. Furthermore, the policy designers in this region should encourage trade openness and liberalize inward FDI for containing consumption-based emissions.

Heterogeneity of consumption-based carbon emissions and driving forces in Indian states

As the second most populous country in the world, India is on the way to rapid industrialization and urbanization, possibly becoming the next carbon giant. With its vast territory and high regional heterogeneity in terms of development stages and population, state-level consumption-based emissions patterns and driving forces are critical but unfortunately, remain far from completed. In this paper, we first applied a multi-regional input-output model to ascertain heterogeneity in consumption-based emissions and track carbon flows in the inter-state supply chain, using our newly constructed Indian multi-state input-output table for 2015, based on Flegg location quotient method. We found that household consumption dominated consumption-based emissions at state levels, accounting for 60–78% of total consumption-based emissions, while investment-led emissions were relatively higher in developed regions the in developing regions. More than 30% of consumption-based emissions in developed states were imported from less developed states with higher carbon intensity, indicating a large spillover effect. In India's low carbon transition, policymakers should not only focus on a local mitigation policy in developed states, but on carbon leakage from the developing states, given the significant heterogeneity in industrial distribution and population. Inter-state cooperation is recommended, with developed states subsidizing the mitigation in the developing states, which also entails a lower marginal cost to low carbon transition.

Empirical study on the impact of international trade and foreign direct investment on carbon emission for belt and road countries

The rapid development of trade along the Belt and Road Initiative (BRI) directly affect economic growth and influence carbon emission. This study used fifty-two BRI countries out of the sixty-five countries that signed onto the BRI in 2013 for the empirical study. The panel data extracted is from the period 1993 to 2018. The study utilized the Common Correlated Effects Mean Group (CCEMG) and the Augmented Mean Group (AMG) estimation techniques for the empirical analysis. The findings revealed a positive link between imports and carbon emissions. Contrarily, exports revealed an inverse relationship with carbon emission, while foreign direct investment inflow revealed a positive but insignificant relationship with consumption-based carbon emission. Therefore, it is recommended that to control the environment and maintain ecological balance, there is the need to establish environmental protection clauses in many international treaties and domestic legislation while promoting international trade.

Asymmetric Impact of International Trade on Consumption-Based Carbon Emissions in MINT Nations

The association between carbon emissions and international trade has been examined thoroughly; however, consumption-based carbon emissions, which is adjusted for international trade, have not been studied extensively. Therefore, the present study assesses the asymmetric impact of trade (import and export) and economic growth in consumption-based carbon emissions (CCO2) using the MINT nations (Mexico, Indonesia, Nigeria and Turkey) as a case study. We applied the Nonlinear ARDL to assess this connection using dataset between 1990 and 2018. The outcomes from the BDS test affirmed the use of nonlinear techniques. Furthermore, the NARDL bounds test confirmed long-run association between CCO2 and exports, imports and economic growth. The outcomes from the NARDL long and short-run estimates disclosed that positive (negative) shocks in imports increase (decrease) CCO2 emissions in all the MINT nations. Moreover, positive (negative) shocks in exports decrease (increase) CCO2 emissions in all the MINT nations. As expected, a positive shock in economic growth triggers CCO2 emissions while a negative shift does not have significant impact on CCO2 emissions in the MINT nations. Furthermore, we applied the Gradual shift causality test and the outcomes disclose that imports and economic growth can predict CCO2 emissions in the MINT nations. The study outcomes have significant policy recommendations for policymakers in the MINT nations.

Consumption-based carbon emission and foreign direct investment in oil-producing Sub-Sahara African countries: the role of natural resources and urbanization

The intensification of international trade movements and economic interconnectivity has far-reaching implications for many macroeconomic indicators, not to mention ecological consequences. To this end, this analysis examines the dynamic interaction between foreign direct investment (FDI), natural resources, economic advancement, and urbanization on consumption-based carbon emission which is adjusted to global trade for oil-producing Sub-Saharan Africa countries. The time frame for this analysis is from 1990 to 2018. To examine the nature of relationship between the outlined variables, a balanced panel econometric analysis alongside augmented mean group (AMG), common correlated effect mean group (CCEMG), and the Driscoll-Kraay(DK) OLS techniques while the system-GMM was utilized for robustness purposes. The outcomes reveal that income increases consumption-based carbon emission within the range of 0.668 to 1.1333%; natural resources also increase consumption-based carbon emission within the range of 0.0159 to 0.2304%; FDI on the other hand increases consumption-based carbon emission around 0.0156 to 0.186%, while urbanization increases consumption-based carbon emission within the range of 0.0231 to 0.6176% in the long run. Thus, there is a positive relationship between consumption-based carbon emission and all the understudied variables within the oil-producing Sub-Sahara Africa countries thereby affirming the pollutant haven hypothesis for the countries on the premises that foreign direct investment inflow has a detrimental influence on the receiving economies alongside natural resource. Hence, the outcomes suggest the need to pursue low-carbon strategies for a cleaner and friendly environment.

Does renewable energy electricity and economic complexity index help to achieve carbon neutrality target of top exporting countries?

Despite extensive studies into international trade and CO2 pollution, a panel of only top exporting economies was not considered. As the current research is an endeavor to address the gap by exploring the impact of economic complexity index (ECI) and renewable energy electricity (RELC) on consumption-based carbon emissions (CCO2) in the presences of exports, imports, and gross domestic product (GDP) in the top exporting countries from 1990 to 2019. The results confirm a relationship between consumption-based carbon emissions, economic complexity index, renewable energy electricity, exports, imports, and economic growth in both the short-run and long run. Empirical evidence for cross-sectional auto-regressive distributed lags (CS-ARDL) estimates, confirms that economic complexity index imports and GDP are positively associated and have significant adverse short-run and long-run impacts on consumption-based carbon emission. Whereas, export and renewable energy electricity significantly reduce carbon emissions. To achieve carbon neutrality target, policymakers should make economic complexity reforms, import green products, and promote investments in sustainable sources.

International trade and consumption-based carbon emissions: evaluating the role of composite risk for RCEP economies.

To tackle the issue of climate change and environmental degradation debates regarding carbon neutrality is on the rise. Regional Comprehensive Economic Cooperation (RCEP), the leading trading union, covers nearly third of global economy, world population, is responsible for thirty percent of global trade and global gross domestic product. The existent study tests the impact of financial, economic, political, and composite risk on consumption-based carbon dioxide emissions (CCO2) in selected RCEP economies during the period of 1990 to 2020. The empirical analysis consists of cross-sectional dependence, slope heterogeneity, cross-sectional augmented panel unit root test, Westerlund cointegration, second-generation cross-section augmented autoregressive distributed lags model (CS-ARDL), and panel causality test. Further, we explore the role of imports, renewable energy supply, exports, and gross domestic product per-capita on CCO2. The empirical results suggest that the less political risk help to mitigate while the lower financial, economic, and composite risk increase CCO2 emissions in selected RCEP economies. Moreover, exports and renewable energy supply show mitigating effect, whereas imports show upsurge in CCO2. Additionally, a bidirectional causality exists between exports and CCO2, imports and CCO2, GDP per-capita and CCO2, political risk and CCO2, and renewable energy and CCO2 emissions, while a one-way causality from financial risk, composite risk, and economic risk to CCO2. Renewable energy supplies along with the improvement in sub-components of political risk, for instance, corruption, government stability, would help to effectively tackle the issue of CCO2 emissions.

Environmental cost of natural resource rents based on production and consumption inventories of carbon emissions: Assessing the role of institutional quality

The association between resource rents, energy intensity, trade and disaggregated CO2 emissions is examined for 93 nations spanning 23 years (1995–2017), while accounting for the quality of government (QoG). The results show that natural resource rents have positive and statistically significant impact on both consumption-based and production-based carbon emissions in the Low QoG countries. For the Upper-High QoG countries, the estimates show statistically insignificant impact on consumption-based carbon emissions and significantly negative (decreasing) impact on production-based emissions. The results also provide evidence that economic growth and import trade have stronger degrading impact on the environment in the Low QoG countries. Based on these results, we conclude that quality of governance plays important role in how natural resources rents are used and consequently their impacts.

The nexus of environment-related technologies and consumption-based carbon emissions in top five emitters: empirical analysis through dynamic common correlated effects estimator.

Climate action got attention from the United Nation's Sustainable Development Goals (SDGs). Although a large number of studies are investigating the said phenomenon, however, the literature on the top five responsible countries is unable to evaluate the role of environment-related technologies (ERTs) and institutional quality (IQ). The top five consumption-based carbon dioxide (CBCO2) emitting economies, i.e., China, India, Japan, Russia, and the USA, are considerable stakeholders in this challenge. To fill this void, with the latest data available from 1992 to 2017, short- and long-run relationships are estimated with dynamic common correlated effects estimator and augmented mean group in the framework of EKC hypothesis. Reported results indicate the negative effect of ERTs and IQ towards CBCO2, which means that adoption of ERTs and better IQ is supportive in controlling environmental degradation. Findings are also robust to the policy implications for the UN's SDGs.

Asymmetric inter-linkages between green technology innovation and consumption-based carbon emissions in BRICS countries using quantile-on-quantile framework

The role of reliable Carbon emission measures and relevant climate policy is imperative in realizing Sustainable Development Goals. A large extent of the literature concludes the emissions-mitigating effect of green innovations in a linear framework and ignored structural changes, technological revolutions, and socio-economic reforms that create non-linearity. Apart from that, there is a murky relationship between emissions and green innovation, where two-way links exist between both variables. Therefore, this study draws the inter-linkages between green technology innovation (GI) and carbon emissions (consumption-based and terrestrial emissions) in BRICS countries using monthly data from 1990 to 2017. Our preliminary findings strictly reject the preposition of data normality and highlight that the observed relationship is quantile-dependent. Therefore, a complete set of non-linear modeling is employed that included; Quantile unit root, Quantile cointegration, Quantile causality, and Quantile on Quantile regression to unveil hidden unit root, cointegration, causality, and association between variables. The results exhibit that the emissions-mitigating effect of GI is only pronounced at higher emissions quantiles in Brazil, China, India, and Russia, whereas at lower emissions quantile, GI is weekly or positively linked with carbon emissions. On the flipside, higher carbon emissions instigate GI across medium to higher emissions quantiles in Brazil, China, and India. Unlike them, Russia produces different outcomes, where higher emissions are associated with lower GI across all quantiles. The overall results suggest that GI (carbon emissions) mitigate (instigate) carbon emissions (GI) when a country is embodied with higher level of emissions.

Assessment of the role of trade and renewable energy consumption on consumption-based carbon emissions: evidence from the MINT economies.

This research formulates a theoretical framework to investigate the impacts of trade on consumption-based carbon emissions (CCO2) and also takes into account the influence of financial development and renewable energy use utilizing panel data for Mexico, Indonesia, Nigeria, and Turkey (MINT) nations between 1990 and 2017. The study utilizes a series of second-generation techniques such as Westerlund cointegration, cross-sectional augmented autoregressive distributed lag (CS-ARDL), and augmented mean group (AMG) tests to capture the linkage between CCO2 emissions and the independent variables. The study aims to answer the following questions: (a) can exports and imports determine CCO2 emissions in the MINT nations? (b) Is there a long-run association among the variables under investigation? The results of the Westerlund cointegration reveal a long-run association among the variables. The CS-ARDL outcomes indicate that imports and economic growth increase CCO2 emissions, while renewable energy use and exports decrease CCO2 emissions. Moreover, the outcomes of the AMG test also give credence to the CS-ARDL results. Our key policy recommendations are that initiatives, rules, and regulatory mechanisms should be implemented that promote the transformation toward renewable energy.

Does environmental taxes achieve the carbon neutrality target of G7 economies? Evaluating the importance of environmental R&D

The present study highlights the importance of environmental taxes and R&D in achieving the goal of carbon neutrality. Post Paris conference (COP21), countries set domestic targets to achieve zero carbon or carbon neutrality. Several studies have been conducted to explore the factors affecting environmental quality. However, the literature on the importance of environmental taxes and environmental R&D in affecting environmental quality is scant, and thus, this study investigates the impact of environmental taxes and R&D on consumption-based carbon emissions for G-7 countries over a period of 1990–2019. The cointegration test results show a stable long-run association between environmental taxes, environmental R&D, imports, exports, GDP, and consumption-based CO2 emissions. The results show that in the short- and long-run, environmental taxes, environmental R&D, and exports significantly reduce carbon emissions, whereas GDP and imports significantly enhance carbon emissions. The Dumitrescu and Hurlin Granger causality test results show that any policy that targets environmental taxes, environmental R&D, exports, imports, and GDP significantly changes CO2 emissions. This study recommends that policymakers in G-7 countries should focus on environmental R&D and taxes to achieve the goal of carbon neutrality.

How can Germany reduce production-based and consumption-based carbon emissions? A decomposition analysis

Developing more effective mitigation strategy to achieve the carbon reduction targets set by the Paris Climate Agreement requires to more comprehension of the driving factors of the decline in carbon emissions. Production-based and consumption-based carbon emission in Germany declined by 2.8% and 8.5% from 2000 to 2015, respectively. In this work, the key drivers behind decline in carbon emission in Germany is explored by combing the multi-regional input-output and structural decomposition analysis. The results show German carbon emissions has been undergoing structural changes. Although its production-based and consumption-based emission declined, German carbon footprint embodied in exports increased, and its share in the production-based carbon footprint also increased. Germany's embodied emission exports to emerging countries increased, although Germany's embodied carbon exports remained mainly concentrate in developed countries, especially in EU (over 40%) and USA (∼10%). The decomposition results revealed that economic scale effect was the leading contributor to increase in carbon footprint in Germany's trade, followed by the industrial structure effect of final demand. The effects of production structure on German's exports was less than its imports. The carbon intensity coefficient was the most significant factor of decreased carbon emission. Generally, the decreasing effect of carbon intensity coefficient exceeded the increasing effect of economic scale, which lead to carbon reduction. The example of Germany shows that improving carbon emission efficiency and optimizing production structure can reduce carbon emission without lowering economic growth.

An asymmetric analysis of the role of exports and imports in consumption-based carbon emissions in the G7 economies: evidence from nonlinear panel autoregressive distributed lag model.

A genuine concern faced by the present world is global warming. Millions of human and animal lives are at risk due to global warming. Therefore, the subject has gained enormous attention from research and academia around the world. Literature shows that the primary cause of global climate change or global warming is carbon (CO2) emissions. Hence, the role of a reliable carbon emission measurement is important for devising a relevant climate policy to deal with environmental problems. Based on trade-adjusted statistics of carbon emissions, a relevant climate policy response can be provided. Unlike the previous studies, this study examines the asymmetric impact of international trade on consumption-based carbon emissions from 1990 to 2017 in the G7 economies. To get empirical estimates, the study applies second-generation co-integration technique and nonlinear panel autoregressive distributive lag (NPARDL) model for estimating the relevant coefficients. The empirical results show that positive growth of exports significantly decreases consumption-based carbon emissions both in the short and long run, whereas the impact of negative growth of exports is insignificant. For imports, the results show that, over time, positive growth of imports significantly increases consumption-based carbon emissions in the long run, while the impact of negative growth of imports is insignificant. Finally, it is recommended for the policymakers to target the export industries for relevant policy interventions, which are less polluting and can generate other economic benefits as well.

Toward a sustainable environment: nexus between consumption-based carbon emissions, economic growth, renewable energy and technological innovation in Brazil.

This research investigates the drivers of consumption-based carbon emissions in Brazil by using a dataset covering the period between 1990 and 2018. These dynamics were examined by employing the ARDL bounds, DOLS, and gradual shift causality tests. The ARDL long- and short-run estimation outcomes reveal that: (a) renewable energy use stimulates the sustainability of the environment; (b) economic growth increases environmental degradation;and (c) technological innovation enhances the quality of the environment. In addition, the gradual shift causality test results disclosed that renewable energy consumption, economic growth, technological innovation and public-private partnership investment in energy can predict consumption-based carbon emissions in Brazil. Therefore, Brazilian policymakers should actively encourage the R&D of low-carbon technologies and renewable energy consumption. Domestic consumption levels, on the other hand, should be targeted, specifically those that are more energy-intensive and cause a rise in CO2 emissions due to consumption.

Research on global carbon emission flow and unequal environmental exchanges among regions

Global carbon emissions have become a huge problem, which greatly accelerates the process of global warming. However, the flow and exchange of carbon emissions caused by international trade has further increased the difficulty of determining carbon emissions responsibilities and advancing world’s emission reductions. Based on the multi-regional input-output (MRIO) model, this study analysed the flow and outsourcing of carbon emissions among six regions of the world in 2014, and applied the regional environmental inequality (REI) index to measure the unequal environmental exchanges among regions. We found that global carbon emissions reached nearly 35Gt, of which more than 20% were outsourced to other regions. Especially developed regions, such as EU 28, USA and Japan, had significantly higher consumption-based carbon emissions than production-based carbon emissions. The unequal environmental exchanges mainly occurred between developed regions and underdeveloped regions. This paper can help to distinguish emission responsibilities of various regions of the world, and contribute to world emission reduction policies.